Holiday rental regulations

Last updated: 08 March 2016

The adequacy of regulation of short-term holiday letting in NSW is being investigated in a parliamentary inquiry.

The inquiry, being conducted by the NSW Legislative Assembly environment and planning committee, is looking at all short-term holiday letting – including increasingly popular platforms such as Airbnb, Flipkey, Home Away and Stayz, which facilitate the connection between travellers and people offering up a spare room or their entire property for short-term lease.

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Why an inquiry?

Jamie Parker MP, who requested the inquiry, says that while he supports the new 'sharing economy', which can improve choice, innovation and competition, he was concerned about the lack of a consistent regulatory framework for short-term holiday letting.

"In some areas, the use of these services to permanently rent out homes or apartments for tourism can affect the character and amenity of the local area. It is important to ensure that accommodation services do not put additional pressure on housing affordability or introduce negative social impacts," he says.

For consumers, one of the major benefits of improved regulation would be the requirement that short-stay rentals meet minimum standards for health and safety – so you're less likely to find yourself at risk of injuring yourself on dodgy electrical appliances in the kitchen, for example, or in accommodation that's unsanitary or doesn't meet its advertised description. But of course the knock-on effect of more regulation is the increased cost associated with compliance, which may be passed on to the consumer.

Shortfalls in current regulation

When we published our guide to Airbnb in July 2015, reports from our community about their experiences with the service were overwhelmingly positive. But using these platforms is not completely risk-free. As one of our readers told us, "Not all places have the same standards, or even adequate standards. Some places could be unclean, others unsafe for kids or [they could] have no smoke alarms."

What the interested parties are saying

The Backpacker Operators Association NSW, in its submission to the inquiry, said its "main concern is that platforms such as Airbnb are facilitating a boom in unregulated and unauthorised – even potentially illegal – accommodation in NSW, particularly Sydney". It says its members hold serious concerns about the impact such platforms are having on the safety of short-term visitors to the state, and wants "a level playing field for its members running compliant, highly regulated accommodation businesses in NSW."

The Holiday Rental Industry Association, whose key members include Stayz, Home Away and Flipkey, said in its submission that it's a misconception that short-term holiday rental is unregulated, but concedes "there are areas where the regulation needs clarification and amendment".

David Sheldon of the Australian Regional Tourism Network (ARTN) said that short-term holiday letting in NSW can fill a gap in the market, "triggering increased spend and increased length of stay in the region, and generating flow on employment opportunities through the wider visitor economy". But in its submission to the inquiry, the ARTN speculated that the recent and massive growth in the use of sharing platforms may have attracted "inexperienced players into the market". This has led to its concerns about "the lack of awareness of the consumer in what to expect from this product, versus short-term accommodation that has met standards and been approved by local government for the prescribed use", the "high number of inexperienced 'operators' that have minimal knowledge of their obligations to the consumer" and the "unpreparedness of local government to respond" to these concerns.

The Bed & Breakfast and Farmstay Association of NSW and ACT (BBFA) points out in its submission that a bed and breakfast (B&B) in NSW has to comply with multiple groups of regulations administered by three levels of government. The association would like to see regulations simplified and standardised. It points out that compliance costs for an average B&B equates to more than 15% of annual turnover. It says while some properties that advertise on platforms like Airbnb are BBFA members, the vast majority aren't and may not be compliant with regulations.

Inquiry terms of reference

There are two public hearings for the inquiry, with the terms of reference including:

a) the current situation in NSW and comparison with other jurisdictions

b) the differences between traditional accommodation providers and online platforms

c) the growth of short-term and online letting, and the changing character of the market

d) the economic impacts of short-term letting on local and the state economies

e) regulatory issues posed by short-term letting including customer safety, land use planning and neighbourhood amenity, and licensing and taxation.